ABSTRACT
The classical and neoclassical growth models proposed respectively by HarrodDomar and Solow identify technology as a major determinant of aggregate economic
growth: a low ICOR (a high marginal productivity of capital) in Harrod-Domar, and a high rate of TFP growth in Solow. Yet these models are incomplete since they do not explain where technology comes from nor how the fl ow of new technologies can be enhanced. In the dual-economy models, we saw greater specifi city in the agricultureindustry interactions and the importance of TFP growth in agriculture for successful industrialization, but technological progress in agriculture remains equally exogenous. Clearly, if we are to give such great importance to technology in explaining growth, we need to have theories that are more explicit at explaining how technology is produced, adopted, and diff used. This is what we look at in this chapter. This includes issues of coordination of investment across sectors, increasing returns to scale when technology generation is endogenous, limited access to international technology when there are intellectual property rights, and the role of policy in promoting the generation, adoption, and diff usion of technology.
